Improving the Procurement Process: a Case Study of a Construction Company

Nowadays, the importance of procurement function in an organization is growing rapidly. The majority of scholars consider it to be a strategic aspect of a company’s activity. Thus, it is crucial to improve its efficiency as procurement processes have impact on all the other company’s processes results. For instance, the financial state of an organization strongly depends on its procurement efficiency. The issue of procurement efficiency is especially relevant for companies performing project-related activities and the main focus of this research paper is construction company. The aim of this study is to identify the most relevant set of tools in order to improve the efficiency of procurement process in the focus company and to develop and suggest the methodology of its practical implementation. In this paper, the current procurement process is analyzed and root causes of its inefficiency are identified through a diagram of casual relationship between problems; tools for procurement process improvement are selected; comprehensive approach to changing the as-is process in terms of document flow, supplier relationship management, system of key performance indicators and automation is recommended; economic effectiveness of chosen tools is proven using the DuPont model. The research paper consists of glossary, introduction, three chapters, conclusion and list of references.